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FTC investigates board ties between Apple, Google

updated 11:40 pm EDT, Mon May 4, 2009

FTC looks at AAPL and GOOG

The Federal Trade Commission has initiated an investigation surrounding ties between board members at Apple and Google, according to the New York Times. Google CEO Eric Schmidt and former Genentech CEO Arthur Levinson hold positions as simultaneous board members of both companies. Unnamed sources familiar with the matter claim Apple and Google have been notified by the commission that an antitrust inquiry has begun.

Although board positions are commonly held by executives from separate corporations, antitrust laws prohibit individuals from serving on the boards of two competing companies if it could lead to consolidated control and anticompetitive practices.

A provision under Section 8 of the Clayton Antitrust Act, regarding "interlocking directorates," is said to be rarely enforced, although the two companies have begun to transition into competing markets. Apple and Google previously dabbled in separate segments of the tech industry, but the iPhone and Android operating system have begun to blur the distinction.

The G1 is viewed as a direct competitor to the iPhone, while variations of the Android OS are also utilized on netbook computers. Aside from computer operating systems and smartphones, Google's Chrome browser offers a potential rival to Safari. With the recent talk of premium content on YouTube, Google could also be entering a market that is currently dominated by iTunes.

"Government actions under Section 8 are rare, but they are brought under circumstances when the presence of a common director on competing boards is likely to be anticompetitive," said Andrew I. Gavil, a professor at the Howard University School of Law.

Schmidt is said to decline participation in Apple's board discussions while the subject surrounds mobile phones. The actions might not be sufficient to avoid intervention from regulators, although most situations result in voluntary resignation to avoid potentially lengthy legal battles.

Despite Google's relationship with the Obama administration, some experts doubt the interaction will influence any investigations. "I expect the administration to be aggressive, generally, on antitrust enforcement," Sanford Litvack, a partner at Hogan & Hartson, told the Times. "I don't expect Google to either be singled out or to receive a free pass because of Schmidt's relationship with the administration."



By Electronista Staff
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Comments

  1. EternalGuest

    Fresh-Faced Recruit

    Joined: Mar 2009

    +5

    dumb

    the apple/google alliance has been great for consumers. apple continues to utilize google's products in their own in amazing, intuitive ways that translates into a better user experience for us. i certainly hope this does not lead to the disintegration of strong collaboration between the two companies.

    Comment buried. Show
  1. testudo

    Forum Regular

    Joined: Aug 2001

    -10

    Re: dumb

    First, in what way (seriously, what AMAZING way) has google's products been utilized by apple?

    Second, there is no reason the Apple/Google alliances could not be done without google members on the board, or even with google board members on the apple board. Companies for centuries have been doing working alliances without the need for board members.

    But apparently you don't mind potential competitors working together to, perhaps, corner a market, or work in an anti-competitive manner. All so you can have an iPhone app to watch waterskiing squirrels?

    Plus, you should be concerned about Google board members using Apple inside information to better their own products.

  1. EternalGuest

    Fresh-Faced Recruit

    Joined: Mar 2009

    +4

    .

    i'm happy with competition, even it is from google. it keeps apple on their toes and is ultimately better for the consumer.

    apple's implementation of google technologies in the iphone were, by my definition of the word, amazing. This view is shared by other individuals' as well (as evidenced by the heavy favorable press it received upon release). time as diminished that perception in addition to competitors catching up a little bit.

    I wasn't suggesting that work couldn't be done without schmidt on the board, i was just stating that if that does in fact happen, i HOPE the relatively high level in which these companies collaborate doesn't diminish.

    I don't feel that the alliance between google and apple in its current form in any way creates anti-competitive behavior. i believe the existence of the android platform and dominance of RIM clearly shows that.

  1. ggirton

    Fresh-Faced Recruit

    Joined: Nov 1999

    +1

    sorry to miss

    I'm sorry to have missed the iPhone app showing waterskiing squirrels. I think that truly IS amazing. You can bet we wouldn't have had THAT without interlocking corporate board members. It sounds more like the Genentech touch, though, rather than Google.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -3

    Re: .

    apple's implementation of google technologies in the iphone were, by my definition of the word, amazing.

    What technologies, though? All I've seen is "Maps" and "YouTube". Maps is a limited iPhone GPS system. YouTube is a video player. Both basically just serve up content from Google's web site. Not sure what exactly is amazing about either, except that "Oh, its on a phone!".

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